Xpeng Inc. is currently searching for a manufacturing site in Europe as a strategy to minimize the impact of import tariffs by producing its electric vehicles within the region.
During an interview with Bloomberg at its headquarters in Guangzhou, China, Xpeng’s chief executive officer He Xiaopeng revealed that the company, a partner of Volkswagen AG in China, is in the early stages of identifying a location in the European Union for future localized production.
He stated that Xpeng plans to establish manufacturing capacity in regions with low labor risks and intends to build a large data center in Europe to enhance software collection for intelligent driving features in their cars.
Despite potential reductions in profits from European markets due to tariff increases, He maintained that Xpeng’s global expansion plans remain unaffected. The company is joining other Chinese EV manufacturers, such as BYD Co., Chery Automobile Co., and Zhejiang Geely Holding Group Co.’s Zeekr, in setting up production facilities in Europe to counteract the impact of increased duties on Chinese-made EVs by the European Union.
In addition to European tariffs, Xpeng has faced challenges in the form of trade disputes with the U.S., which has imposed tariffs on Chinese EV imports. These disputes have further complicated the operating environment for Xpeng, which has experienced difficulties in domestic sales, disputes over product planning, and fierce competition in the Chinese market.
Despite these challenges, Xpeng has found a silver lining in its partnership with Volkswagen, which has helped the company improve its gross margin and expand its expertise in artificial intelligence and advanced driving technologies. Xpeng is investing heavily in AI research and development, including developing its own chips, to position itself as a key player in the evolving landscape of intelligent vehicles.
AI Advantage
Xpeng believes that its AI capabilities will be crucial in penetrating the European market, necessitating the establishment of a large-scale data center in the region. The company foresees a future where AI-powered vehicles will dominate the market, with Xpeng aiming to be at the forefront of this trend by rolling out such products from 2025 onwards.
